Forex - EUR/USD weekly outlook: April 29 - May 3

The euro edged higher against the dollar on Friday after weaker-than-expected data on U.S. first quarter growth, but gains were capped amid concerns over a possible rate cut by the European Central Bank.

EUR/USD rose to a session high of 1.3048, before settling at 1.3028, up 0.15% for the day, but down 0.21% for the week.

The pair is likely to find support at 1.2972, the low of April 23 and resistance at 1.3092, Thursday’s high.

The Commerce Department said U.S. gross domestic product expanded by 2.5% in the three months to March, missing expectations for growth of 3.0%.

The disappointing data added to expectations that the Federal Reserve will continue its monetary easing program, amid lingering concerns over the outlook for the U.S. economic recovery.

But the euro remained under pressure as speculation over an interest rate cut by the ECB intensified following weak German economic data earlier in the week.

Data on Wednesday showed that the Ifo index of German business climate fell to a four month low of 104.4 in April from 106.7 in March.

The data came one day after a report showed that Germany’s manufacturing and service sectors contracted in April.

Recent comments by ECB officials have indicated that the bank would consider cutting rates if economic data continued to deteriorate.

The euro fell to three-month lows against sterling on Friday, withEUR/GBP slipping 0.12% to settle at 0.8420, 1.39% lower for the week, after data on Thursday showed that the U.K. economy returned to growth in the first quarter, avoiding a triple dip-recession.

The single currency was also weaker against the broadly firmer yen, withEUR/JPY settling at 127.78, down 1.05% for the day and 1.38% lower for the week.

The yen found support after the Bank of Japan left monetary policy on hold on Friday.

In the week ahead, investors will be awaiting the outcomes of policy meetings by the Federal Reserve and the ECB, as well as Friday’s closely watched report on U.S. nonfarm payrolls.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 29

Germany is to release preliminary data on consumer price inflation, which accounts for the majority of overall inflation.

The U.S. is to produce official data on personal income and expenditure, as well as private sector data on pending home sales, a leading economic indicator.

Tuesday, April 30

The euro zone is to release preliminary data on consumer inflation as well as official data on the unemployment rate. The Gfk Institute is to publish a report on German consumer climate.

Meanwhile, Spain is to release preliminary data on first quarter economic growth and Germany is to produce government data on the change in the number of people unemployed.

Later Tuesday, the U.S. is to release data on consumer confidence, a report on manufacturing activity in Chicago and private sector data on house price inflation.

Wednesday, May 1

In Europe, markets in Switzerland, Germany, France and Italy are to remain closed for the Labor Day holiday.

The U.S. is to release the ADP nonfarm payrolls report on private sector job creation as well as government data on crude oil stockpiles. In addition, the Institute of Supply Management is release data on U.S. manufacturing activity, a leading economic indicator.

In addition, the Federal Reserve is to announce its benchmark interest rate. The announcement is to be accompanied by the bank’s monetary policy statement, which contains valuable insights into economic conditions from the bank’s perspective.

Thursday, May 2

In the euro zone, Spain and Italy are to release data on manufacturing activity, while France is to hold an auction of 10-year government bonds.

Meanwhile, the ECB is to announce its benchmark interest rate; the announcement is to be followed by a post-policy meeting press conference with President Mario Draghi.

The U.S. is to publish the weekly government report on initial jobless claims as well as official data on the trade balance.

Friday, May 3

The European Union is to release its economic forecasts for European Union countries.

The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate as well as data on average hourly earnings and factory orders. In addition, the ISM is release data on U.S. service sector activity, a leading economic indicator.

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